Thailand Economic Outlook

November 13, 2018

Economic activity is expected to have moderated in the third quarter, following strong growth in H1. Momentum in the manufacturing sector ebbed somewhat, as demonstrated by the manufacturing PMI, which averaged slightly lower than the previous quarter. Moreover, the external sector appeared to soften, with the trade surplus narrowing to a four-year low on soft export growth and surging imports. In addition, the all-important tourism sector took a hit from the Phuket boat accident. More encouragingly, growth in private consumption accelerated in the third quarter on the back of still-muted inflationary pressures and improving non-farm incomes, while consumer and business confidence were solid. Looking at Q4, the picture remains mixed: Business confidence and the PMI fell below the crucial 50-point mark in October, while consumer confidence remained elevated. In early November, the government announced a series of measures to reignite the tourism sector, including visa fee waivers for citizens of some countries for two months.

Thailand Economic Growth

Economic growth is expected to moderate next year on slower private consumption and export growth. However, private consumption will still be resilient, likely benefiting from rising income levels and a tight labor market, while fixed investment should pick up amid high capacity utilization. A further escalation in the U.S.–China trade spat and possible political uncertainty in the build-up to next year’s elections pose downside risks. The panel projects that the economy will grow 3.8% in 2019, which is down 0.1 percentage points from last month’s forecast, and 3.5% in 2020.

Thailand Economic News

Hawkishness continues to grow among the members of the Monetary Policy Committee of the Bank of Thailand, despite leaving the one-day repurchase rate unchanged at 1.50%, where it has been for over three years.

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